Money supply

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    Money Supply Concept

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    2.1.13 The Concept of Money supply According Layi (1999) money supply means the amount of money which is available in an economy in sufficiently liquid and spendable form. What constitute the components of this money supply depends on what has been officially accepted by monetary authorities of each country as the constituents of money supply for that country. Thus, each country‟s money supply definition may be unique. According to him the narrowest definition of money supply in modern time is currency plus demand deposit and this definition is known theoretically as M1. M1 = C + DD Where C is currency held by the public and not in commercial or merchant banks or currency in circulation less notes and coins in the vault of commercial and merchant…

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    targeting of the money supply and interest rates, foreign exchange markets and rates The questions that I will answer for this week’s assignment are as follows: Why the simultaneous targeting of the money supply and interest rates is sometimes impossible to achieve? How do central banks intervene in foreign exchange markets? What did the Bretton Woods Agreement do to the ability of foreign exchange rates to fluctuate freely? Targeting Money Supply and Interest rates Firstly, the Fed targets…

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    The increasing and decreasing of excess reserves makes meeting the money supply achievable for the Federal Reserve. These Reserves help control the commercial banks money supply. Consequently Federal Reserves are a liability because, of the claims commercial banks may have against them for funds that are owed. The banks are under the assumption that the funds of an individual receiving a loan approval will not remain in a debtors account. Therefore, bank anticipates the check and debits will be…

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    It is often said that money makes the world go round. Money plays an important role in a country’s economy. Citizens must have money in order to spend money. Governments can help banks create money. In the United States (US), the Federal Reserve is responsible for controlling the money supply to keep the economy running smoothly. One must fully understand the US money and banking system to fully grasp the money market. Knowledge of items that serve as money, the effects of actions taken…

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    There is an argument between which theory works best, side-supply or demand-side. They are both important because you need both the supplier and consumer. When you comparing and contrasting the two arguments it is obvious that they are both needed to make our economy better. Supply-side economics is also known as Reaganomics or the "trickle-down" policy. Side-supply has three parts: tax policy, regulatory policy and monetary policy. Tax cuts for investors and entrepreneurs gives a greater…

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    centers specifically on the money theory postulated by Keynes. We focus on the flaws in the classical money theory and then move on to explain the Keynes money model, then work on the criticisms on it. Since it is believed in the 1960's 70's and even now that "Never trust any theory of money older than thirty years" The Classical Theory: The fundamental principle of the classical theory is that the economy is self regulating. Classical economists maintain that the economy is always capable…

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    If a president makes laws that help people make money and there is no people around to follow them than the economy will not get better. The biggest influence on the economy is the chairman of the Federal Reserve Board, they have the monetary policy; actions of a central bank, currency board or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates. The Fed’s goals are to stabilize prices and promote maximum sustainable…

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    primarily responsible for buying and selling of government securities in order to tighten or increase the money supply. For example, the Fed increases the money supply by buying securities thus increasing the amount of money available in the banking system and selling securities in order to decrease the amount of money available. This impacts both banks and consumers, as the money supply decreases (contractionary) interest rates rise and as the money supply increases (expansionary) interest…

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    decide to not to. Now in December 2016, the Federal Reserve is now debating again, whether or not to increase interest rate. Some support it and others don’t. Based on the Quantity Theory of money and its relationship to interest rate, the overall effect would be neutral. The increase wouldn’t significantly change the current state of our economic, therefore the end result would be neutral, creating a balance between the inflation rate and nominal interest rate. Quantity theory of money is a…

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    Oil Crisis Case Study

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    The effects on individual consumption, business investment, and money supply led to the macroeconomic problems. Using different methods of macroeconomic study, economists acquire a general perspective of economic problems. One of the simplest graphs to understand is the supply and demand graph. It’s the use of this graph that helps in understanding higher prices during the oil crises; lower supply equals higher demand price, and higher supply equals lower demand prices. However, supply and…

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